Renault-Nissan in talks to boost AvtoVAZ stake

The Renault-Nissan alliance is in talks to raise its stake in Russian carmaker AvtoVAZ by purchasing shares from Troika Dialog, the Moscow brokerage that's trying to sell its 25 percent holding.

MOSCOW (Bloomberg) -- The Renault-Nissan alliance is in talks to raise its stake in Russian carmaker AvtoVAZ by purchasing shares from Troika Dialog, the Moscow brokerage that's trying to sell its 25 percent holding.

“Troika Dialog is in negotiations with Renault-Nissan,” Troika managing director Serguei Skvortsov said. “The talks are at a very early stage.”

Skvortsov ‘s comments came after Carlos Ghosn, who heads Renault SA and its Japanese affiliate Nissan Motor Co., told Russia Today television that he was in discussions to buy Troika's stake, worth 11.6 billion rubles ($378 million) at yesterday's closing price.

Renault-Nissan had until now resisted public pressure from Russian officials including Prime Minister Vladimir Putin to increase the 25 percent stake in AvtoVAZ that Renault bought for $1 billion in 2008.

In addition to Renault's cash investment, the alliance supplies tooling and technology to AvtoVAZ's Togliatti plant, which will allow it to build cars under the Renault, Nissan and Lada brands.

“As part of our long-term strategy, the alliance will continue to make investments in our business in Russia, which could include taking a larger stake in our local partner,” Renault-Nissan spokesman Simon Sproule said in an e-mailed statement.

Renault as recently as June said it had no plans to raise its stake in the Russian carmaker. Renault owns 43.4 percent of Nissan, which in turn holds a 14.5 percent stake in France's second-largest carmaker.

Renault agreed a year ago to contribute technology worth 240 million euros to help AvtoVAZ develop new models and improve efficiency.

The French carmaker raised 3 billion euros Oct. 7 by selling a 14.9 percent stake in Volvo AB, saying at the time that the sale was designed to “strengthen Renault's balance sheet” and pay down debt.

Troika, Renault and state-owned Russian Technologies Corp. each hold 25 percent of AvtoVAZ. Troika, Russia's oldest brokerage, said in March it was “ready to exit” AvtoVAZ.

Oleg Lobanov, vice president for finance at AvtoVAZ, said Oct. 26 that the carmaker expects net income of 1 billion rubles in 2010 under Russian accounting standards. AvtoVAZ had nine- month net income of 622 million rubles, he said.

Russia has offered to acquire part of the French government's 15 percent Renault stake if the carmaker increases its holding in AvtoVAZ, Prime Minister Putin said in June.